Business interruption cover related to covid-19 losses

On Friday 15th January 2021, the UK Supreme Court handed down its judgement in the FCA Test Case in favour of policyholders. However, contrary to much of the media coverage, this does not mean that all business interruption cover insurance policies will provide cover. The FCA Court Case was to determine whether policies from a number of insurers in which the wording was deemed unclear should be interpreted in favour of the policyholder or the insurer. Insurers have consistently stated that it was never their intention to provide cover for pandemic risks under standard SME policies but those policy wordings under consideration by the Supreme Court were ambiguous on whether cover ‘accidentally’ applied, and it is on these wordings that the Supreme Court has ruled. Following conclusion of the case, Insurers will contact policyholders that have made a claim, where the Court’s judgement affects the insurer’s decision on whether cover applies. Policyholders that have not already lodged a claim, who believe that the Supreme Court decision means that their business interruption cover applies to them, should contact their insurer or broker to see if this is the case. Whilst this is great news for some who will now be able to make a claim, the wider ramifications will no doubt be increased premiums for all in the future.